Bring Back Managing for Value

After years of cheap capital, many companies drifted away from managing for shareholder value in favor of loosely defined stakeholder models. Now capital costs are moving back toward historical norms, and value maximization should once again guide decision-making. However, it must be applied differently than it has in the past. This article proposes a simple but disciplined model: Retain value maximization as the governing objective but explicitly recognize stakeholder commitments as constraints that limit the set of feasible choices. The authors distinguish between hard constraints (nonnegotiable commitments) and soft constraints (which guide choices among value-creating alternatives) and describe four foundational capabilities that companies must rebuild. Leaders can use this model to evaluate alternatives consistently, allocate capital to its highest-value use, and address legitimate stakeholder claims without sacrificing accountability.

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